Archived - Quarterly Financial Report - For the Quarter Ended December 31, 2013

This quarterly report has been prepared by management as required by section 65.1 of the Financial Administration Act and in the form and manner prescribed by the Treasury Board. This quarterly report should be read in conjunction with the Main Estimates, as well as, Canada's Economic Action Plan 2012 (Budget 2012).

Contributing to the jobs and growth in Canada, the Canadian Northern Economic Development Agency (CanNor) works to develop a diversified, sustainable and dynamic economy across Canada's three territories.  It does this by delivering economic development programs, undertaking policy and research, and by collaborating with and aligning the efforts of other federal departments, territorial governments, Aboriginal organizations, and industry. This is particularly the case in resource development through its Northern Projects Management Office (NPMO).

Further details on CanNor's authorities, mandate and program activities may be found in the Report on Plans and Priorities and in the Main Estimates (Part II).

Basis of Presentation

This quarterly report has been prepared by management using an expenditure basis of accounting. The accompanying Statement of Authorities includes CanNor's spending authorities granted by Parliament and those used by the Department consistent with the Main Estimates for the 2013-2014 fiscal year. The authority of Parliament is required before moneys can be spent by the Government. Approvals are given in the form of annually approved limits through appropriation acts or through legislation in the form of statutory spending authority for specific purposes.

As part of the Parliamentary business of supply, the Main Estimates must be tabled in Parliament on or before March 1 preceding the new fiscal year. Budget 2012 was tabled in Parliament on March 29, after the tabling of the Main Estimates on February 28, 2012. As a result the measures announced in the Budget 2012 could not be reflected in the 2012-2013 Main Estimates.

In fiscal year 2012-2013, frozen allotments were established by Treasury Board authority in departmental votes to prohibit the spending of funds already identified as savings measures in Budget 2012. In 2013-2014, the changes to departmental authorities were reflected in the 2013-2014 Main Estimates tabled in Parliament.

This quarterly report has been prepared using a special purpose financial reporting framework designed to meet financial information needs with respect to the use of spending authorities.

As part of the departmental performance reporting process, CanNor prepares its annual departmental financial statements on a full accrual basis in accordance with Treasury Board accounting policies, which are based on Canadian generally accepted accounting principles for the public sector. However, the spending authorities voted by Parliament remain on an expenditure basis.

Statement of Authorities

As at December 31, 2013, total authorities available for fiscal year 2013-2014 amounted to $52.4M, a $2.4M reduction from the same point last year.

Fiscal year 2013-2014 was the first full year for which the Deficit Reduction Action Plan impacted on the Agency. This impact accounted for $2.2M ($1.0M in contributions funding - $1.2M in operating funding) of the $2.4M overall reduction in available authorities. Other minor statutory and program adjustments make up the difference.

Statement of Departmental Budgetary Expenditures by Standard Object

Compared to the previous year, total budgetary expenditures recorded in the quarter ending December 31, 2013 decreased by $3.7M, from $11.0M to $7.3M.

This primarily is the result of transfer payments expenditures decreasing by $3.8M in the quarter. This decrease relates to timing differences for contribution payments.

With respect to non-transfer payment reporting objects, there was an overall increase in expense of $100K. The three reporting objects to highlight are:

1. Personnel expenses increased by $300K as a result of successful staffing activities to build capacity within the Northern Project Management Office.
2. Professional and Special Services costs are higher over the same nine month period last year due to earlier partial payment of the AANDC MOU ($100K), increased payments to date to Justice Canada ($94K) and increased payments to date to PWGSC for HR services ($100K).
3. Rental costs decrease is due to timing differences of payments to PWGSC for accommodation costs ($400K).

All other reporting objects had only minor differences.

Business development in the North needs to deal with the complexities related to remote communities, sparse population, dependence on natural resource extraction and associated challenges, such as underdeveloped infrastructure and labour market gaps.

Program delivery in the North therefore requires a strong focus on risk management and mitigation.

The Canadian Northern Economic Development Agency has updated its Corporate Risk Profile and is presenting a revised risk assessment in its most recent Report on Plans and Priorities. Risks have been divided into two categories: internal and external. The Agency has deleted "public communications" as a risk and instead incorporated a communications component where necessary into individual risks and mitigation measures. Two new risks have been added: the first being in the area of performance measurement; and the second in the area of information management and information technology. Finally, other risk areas and mitigation measures have been updated to reflect the Agency's current reality.

CanNor has identified the following seven key risk areas in the 2013-2014 Report on Plans and Priorities:

Internal Risks

Internal & External Risks

5. Operational Environment

External Risks

6 .Relationships with Clients, Partners and Stakeholders

7. Legal, Statutory and Land Claims

Further details on these risks and how CanNor plans to manage and mitigate the risks can be found in the Report on Plans and Priorities for the Agency. CanNor monitors expenditures and carries out business planning to ensure that financial risks are mitigated and that program delivery is optimized. Efforts are underway to increase the pace of project review and disbursements of contribution programs in order to reduce the risk of year-end lapses.

The Agency is planning for additional resources to ensure capacity to support federal participation in northern regulatory processes and to advance resource development in the North.

This section provides an overview of the cost saving measures announced in Budget 2012 that will be implemented to ensure the Government operates as efficiently as possible. CanNor's cost savings measures are focused on modernizing operations and improving efficiency and effectiveness as an organization to help the Agency better serve its clients.

The Canadian Northern Economic Development Agency will achieve total Budget 2012 savings of $2.4M in this current fiscal year by reducing office space, implementing more efficient business processes, reducing program funding to respond to a degree of overlap and duplication, and more closely aligning resources to its core mandate.

As part of Budget 2012, contribution authorities have decreased by $1M and operating authorities have decreased by $1.2M in 2013-2014 in addition to a decrease of $.2M in 2012-2013 in operating authorities. The decrease to contributions aligns with renewing Aboriginal Economic Development Programs which will include approaches to address the capacity development requirements of Aboriginal communities.

These changes will ensure that CanNor has sustainable programs that support economic growth and meet the needs of the North for the long term.

Approved by:

STATEMENT OF AUTHORITIES (unaudited)

	Fiscal year 2013-2014			Fiscal year 2012-2013
(In thousands of dollars)	Total available for use for the year ending March 31, 2014*	Used during the quarter ended December 31, 2013	Year-to date used at quarter-end	Total available for use for the year ending March 31, 2013*	Used during the quarter ended December 31, 2012	Year-to date used at quarter-end
* Includes only Authorities available for use and granted by Parliament at quarter-end.
Vote 25   - Net Operating	12,746	2,783	7,713	13,784	2,687	7,277
Vote 30  -  Transfer payments	38,664	4,246	8,212	39,862	8,010	10,710
Budgetary statutory authorities	1,024	256	768	1,172	293	879
Total Budgetary authorities	52,434	7,285	16,693	54,818	10,990	18,866
Non-budgetary authorities	0	0	0	0	0	0
Total authorities	52,434	7,285	16,693	54,818	10,990	18,866

Departmental budgetary expenditures by Standard Object (unaudited)

	Fiscal year 2013-2014			Fiscal year 2012-2013
(In thousands of dollars)	Planned expenditures for the year ending March 31, 2014	Used during the quarter ended December 31, 2013	Year-to date used at quarter-end	Planned expenditures for the year ending March 31, 2013	Used during the quarter ended December 31, 2012	Year-to date used at quarter-end
Expenditures:
Personnel	7,550	2,422	7,159	8,276	2,115	6,476
Transportation and communications	1,900	152	354	2,116	179	727
Information	100	11	25	300	22	25
Professional and special services	2,400	340	559	2,114	139	260
Rentals	1,300	72	310	1,150	488	614
Repair and maintenance	70	14	22	50	1	1
Utilities, materials and supplies	150	32	50	200	35	51
Acquisition of land, buildings and works	100	0	0	450	0	0
Acquisition of machinery and equipment	100	-5	1	200	0	1
Transfer payments	38,664	4,246	8,212	39,862	8,010	10,710
Public Debt Charges	0	0	0	0	0	0
Other subsidies and payments	100	1	1	100	1	1
Total budgetary expenditures	52,434	7,285	16,693	54,818	10,990	18,866